Gas prices hit $4 in California

Gas prices are above or near an average of $4 a gallon statewide, and are already well over that dreaded mark in Southern California. GasBuddy.com showed gas selling for $4.01 on Thursday, while the AAA listed the state average at $3.99 -- a jump of three cents from Wednesday, 22 cents from a week ago and 37 cents from last month.

While drivers may not yet be freaking out like last year, when the record of $4.67 was reached on Oct. 9, they are none too pleased, especially with the peak summer driving time still months away.

"The fact that nationally we are using less gas but the cost goes up is really frustrating," said Jim Matthews, 56, a librarian from Alameda. "And that makes us feel helpless."

Energy watchers blame the usual factors -- high crude prices, refinery problems and the conversion to California's more expensive summer blend of fuel, which requires a slowdown in production before the change.

Tesoro's Golden Eagle refinery in the Bay Area took some equipment out of service last weekend after a hole was discovered in a line. Repairs may last until the end of the month. Several refineries in Southern California have also had problems in the past two weeks, which is why prices there are well over the $4 mark, and in some places $5 or more.

"Given that the West Coast in general, and California in particular, maintains a very tight balance between supply and demand, any refinery issues have a large regional impact," said Ryan Mossman, vice president of fuel management for Houston-based FuelQuest.

Advertisement

In addition, Mossman said, there is a "new normal" in play for fuel retailers. In 2004, daily price swings of three cents or more nationally used to occur 6 percent of the time, but now it's nearly 50 percent.

"This means that even when there are no unplanned events like refinery closures that can cause market disruptions, day-to-day volatility is significant enough that retailers are having to adopt new approaches to fuel buying, which ultimately translate into lower fuel margins for retailers or higher prices for consumers," Mossman said.

Tell us about it. Los Angeles, San Diego and Ventura motorists are paying $4.09 a gallon, the most of any California cities surveyed by AAA.

San Francisco's average was $3.98, with San Jose at $3.93 and Oakland at $3.91. But numerous stations in the Livermore-Pleasanton area went over $4 this week.

"I'm not surprised at what I'm seeing, but I am surprised it's coming early," Tom Kloza, chief oil analyst at the Oil Price Information Service told the Associated Press.

The high prices are taking a bigger chunk out of our pocketbooks. The U.S. Energy Department said American households spent an average of $2,912 on gasoline in 2012, or almost 4 percent of their pretax income. That's the highest percentage in 30 years, with the exception of 2008.

A man buys gas at a Los Angeles station on Jan. 31, 2013. (Nick Ut/AP file)

The question on the minds of many Bay Area motorists: How long will prices continue to soar?

There may be a bit of good news. The skyrocketing prices could level off in a week or so, then ease for a few months before beginning their usual climb before Memorial Day.

"My forecast is for gasoline prices in California to level off, then go back down before Valentine's Day to an average of $3.90 per gallon," analyst Bob van der Valk said. "The good news is refineries are going to get back online in the next six weeks and gasoline prices will level off and perhaps go back down below $4 per gallon."

Another ray of hope: The California Energy Commission says refinery output is running close to 2012 levels at slightly more than 5.8 million barrels a week, and gas inventories are 13.3 percent higher than they were at this time last year, at just under 7 million barrels.

And the American Petroleum Institute is standing by its prediction that the average price for this year should be 20 cents a gallon lower than last year across the country, as we are burning less gas while producing more. Last year, U.S. oil demand fell to the lowest level in 16 years.

Still, four bucks a gallon is not something many are eager to pay.

"Gas prices are like milk, diapers, etc.," said Scott Connelly, 37, of San Jose. "We're basically slaves to those prices."

The Associated Press contributed to this report. Contact Gary Richards at 408-920-5335.